PPM User Guide 030525 by Alice Guo

Purpose and Scope of this Guide

This Guide is intended to give an overview of the UCSD Configuration and use of the Oracle Financial Cloud Project Portfolio Management (PPM) Subledger. This is a dynamic document to be updated as additional enhancements to the system and business processes are made. This guide includes links to additional, more detailed information where applicable. This guide includes information on some related processes outside of PPM but is not an all-encompassing Oracle Financial Cloud user guide.

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2.2.7.3.1

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1 Overview

Within the Oracle Financials Cloud, transactions are accounted for in the General Ledger (GL) but can be tracked at a more granular level within Oracle Project Portfolio Management (PPM). PPM is a suite of modules (including Awards, Contract Management, Project Financial Management, Project Financial Plan, Project Costs and Commitments) that is designed to track project costs, billing and revenue against project budgets. PPM operates as a subledger that tracks detailed transactions separately and then generates a summary-level entry to record those transactions in the General Ledger (GL). The General Ledger is a summarization of data from all the subledgers that provides a higher-level view of accounting activity with less granular detail than PPM or other subledgers.

In PPM, a project is a primary unit of work that can be broken down into one or more tasks. The project number assigned in PPM matches the seven-digit project number in the chart of accounts project segment, but the two are distinct elements. In the GL, the project segment is part of the Chart of Account. Transactions are done using chart strings via journal entries. In contrast, PPM uses the POETAF string to transact in the PPM subledger. See section 1.5 for further detail.

Elements from the legacy accounting system do not translate exactly into elements of Oracle Financials. Project and index (pre-Oracle) are not equivalent. Task and index are not equivalent. Transactions in PPM do not occur via journal entry, which can only be processed in the GL. To see the detailed information on any transaction, users need to look in the subledgers directly or use reports based on subledger data.

1.1 Understanding Subledgers and General Ledger

This diagram illustrates the flow of transactions from subledgers into the General Ledger. Accounts Payable and Accounts Receivable can push data directly into the General Ledger, without PPM involvement, or PPM can be an intermediary that collects and/or creates transactions before the data is aggregated to the GL.

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This table illustrates how Oracle Projects supports Expenses, Revenue, Resources and PPM Budgets at the project and task levels in PPM:

of core and external

PPM Budgets (Financial Plans) are managed and controlled by departments - not central offices. This process can be useful for planning at the task level and will be in PPM reports in the Budget column.

1.2 Reasons to Use PPM

 To track:

o Contracts and Grants Award information, including funding amount, budget, expenses and revenue.

o Traditional projects that have a start and an end date (e.g. Sponsored research, construction, conferences).

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o Fabrications.

o Long-term efforts that cannot be captured by another segment in the chart of accounts (e.g. Recharge operations, academic courses, groups in the same financial unit).

o Expenditures by task more granularly than required by campus leadership when needed for local level leadership.

 To record short-term and one-time costs (e.g. Faculty startup dispensations, service agreements).

 To view expenses in PPM and support performance monitoring with Budget vs. Actuals and facilitate reporting.

 To further track expenditures at a task level.

1.3 Nuances between Budgeting in PPM and Budgeting in EPBCS

PPM functionality allows a budget (financial plan) to be entered at the project and task level in order to monitor variances between expected expenses and actuals. The PPM budget is a distinct concept from the Campus Operating Plan that is developed in the Oracle Enterprise Planning and Budgeting Cloud Service (EPBCS). EPBCS has a separate budget planning and review process that occurs on an annual basis with approval from multiple layers of university management culminating with the Chancellor’s approval.

The approved campus budget results in allocations being distributed to financial units. The PPM budget is a tool that can be used to implement the approved campus budget spending plan and enable reporting at a more granular level than is possible in the GL. There can be instances where the EPBCS budget will not exactly match the financial plan in PPM for valid reasons. The EPBCS budgeting tool was designed to accommodate yearly baselined budget imports into PPM for General projects in FY22. EPBCS Operating Plan budget allocations are posted to the GL using the “chart string” including the project segment as the basis to post in the GL.

1.4 Nuances between PPM and GL Data

 Campus Operating Plan (EPBCS) allocations are in the General Ledger at the project level only and are visible together with PPM detailed expenditure data only through reporting. Allocations are visible with summarized expenditure data in the General Ledger.

 External revenue generated through PPM Contracts is visible on the contract at the task level, through MyProjects in OFC and through reporting at a detailed, task level and summarized in the General Ledger at the project level.

 External revenue not generated through PPM Contracts are in the General Ledger at the project level only and are visible together with PPM detailed expenditure data only through reporting. This revenue is visible with summarized expenditure data in the General Ledger. See section 2.3.2 for more information about the revenue distinctions.

 POET(AF) is used to transact in PPM whereas the chart string is used to transact in the GL. See section 1.5 for more information.

 POET or POETAF is only used in the PPM subledger not in the GL.

 PPM displays Payables costs at time of payment approval. The GL shows this expense and a payable liability when an invoice has been approved and shows a withdrawal of cash when paid. PPM tracks a Cost Commitment until the payable is paid.

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1.5 Coding Transactions to the PPM Subledger (POET/POETAF)

To code transactions to the PPM subledger, Project number, Organization, Expenditure Type, Task, Award, and Funding source must be provided. All transactions in PPM have four required fields and two (sometimes) optional fields:

Name Description

Project Number

The unique number that describes a project. These identical values will also appear in the COA as a value in the Project segment.

Expenditure Organizatio n Organization generating the expense. Does not drive accounting-only reporting

Required for

All transactions in PPM

All transactions in PPM Expenditure Type

The specific type of expense being incurred. The expenditure type is used to derive the account segment value in the COA, but expenditure types are more granular. There can be multiple expenditure types associated with a single account code, each with a different description

Task Number

Award number

Funding Source

The number that represents the project task incurring the expense.

The award to be used for this transaction. The base award number matches the Kuali Research (KR) award number.

Name of the sponsor in KR for the external funding source. This is NOT the same as the Fund in the COA. This is also the name of any Internal Funding Sources (used for Cost Sharing)

All transactions in PPM

All General Projects (Faculty Funds, Dept Discretionary, etc.) and Capital Projects will use the shortened POET string (no Award or Funding Source is required).

All transactions in PPM

Transactions against projects that have awards.

Most Project creation and modifications are managed through PADUA. See How to use PADUA 2.0 for more information.

1.6 How Costs are entered and accounted in PPM

 PPM offers Costing functionality and is most commonly transacted through Miscellaneous Cost Import (MCI). Central Offices also have access to create costs directly in the system.

 PPM creates its own overhead (burden) transactions.

 PPM creates accounting for costs that are imported from outside Oracle Fusion Payables through Subledger Accounting rules (SLAs). Examples of costs processed this way include:

o UCPath

o Recharge Operations

 There are occasions when transactions are created outside of PPM and OFC. In those cases, a transaction is imported into the GL via journal entry. To have it represented as an expense in PPM without having it duplicated in the GL, the imported transaction is designated as “costed and accounted” in PPM. That way it does not affect GL accounting. There are very few transactions imported this way. Examples of this include:

o ISIS transactions

o EPIC transactions

o Financial Control entries

 Costs for a project should always be reflected in PPM.

 Costs must be incurred during award/project/task dates. In other words, the Expenditure Item Date of the transactions must be within the start and end dates of the task being charged to

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o Expenditure Item (EI) Date: Date a cost was incurred (service or good provided)

o Project End Date: Date project ends. This is equal to the latest task end date.

o For more information on Dates, see section 2.2.8.

 PPM Costs that are not able to be posted for date issues are considered Unprocessed Costs

o These must be corrected to be reprocessed, or the cost posted to a different project.

 PPM Costs that are not able to be posted for other control issues are considered Unprocessed Costs

o These must be corrected to be reprocessed, or the cost posted to a different project.

o See section 8 below for more information.

 PPM Commitments are a type of cost to represent an obligation to pay, but is not yet a project cost. An example of this is a Purchase Order or subcontracts. More information on Commitments can be found at Commitments in OFC

1.6.1 PPM Subledger Accounting Rules (SLAs) overview

SLAs are built based on logic to derive each chart segment. The current system configuration has multiple rules not captured in the table below. SLAs are subject to change based on requirements. Each entry drives a journal to the GL. Journals are always two lines per entry (could be summarized).

This table represents the expense and revenue SLAs for PPM (all subledgers have their own SLAs). The correlating entry (usually a liability or balance sheet account) is not represented here.

Segment

PPM Data element derived from Entity

Based on the FinU Fund

SP: Based on the Award Type

GP and CP: As entered on the task on the Project or Contract

Financial Unit (FinU)

Based on the Project Owning Organization (costs) or Contract Owning Organization (revenue)

CP: NICA for CAMPUS, Balance Sheet for Health Account

Based on the Expenditure Type for expenses

Based on the contract for revenue Function

SP: Based on the Award Purpose

GP and CP: Based on the function entered on the task Program

SP: N/A

GP and CP: Based on the program entered on the task Location

SP: N/A

GP and CP: Based on the location entered on the task Project

Based on the project being expensed to or billed off (revenue from contract)

SP: Project not on revenue Activity

InterEntity

Future 1

Future 2

n/a not used for PPM activity

n/a-system derives value

n/a not in use

General Projects and Capital Projects leverage DFFs to capture values for the SLAs to use.

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1.6.2 Defined Flex Fields (DFFs)

Defined Flex Fields are fields that Oracle provides that customers can customize for their needs. These fields can be a variety of types of field types such as free form, checkbox, or list.

When General and Capital Projects are setup, there are 4 DFFs on the Task that are available to enter segment values to drive SLAs. These are Fund, Function, Program, Location. Fund and Function are required. On General and KR Service Agreement Contracts, there are 2 DFFs on the Contract for fund and account to drive the revenue and AR SLAs.

2 Project Types

Project types include capital, fabrication, sponsored, general, and default projects. Each project type provides controls on how Oracle Projects processes the projects for accounting and reporting. Each project type has a class category, and a class code for reporting purposes. Default Projects are considered a type of general project and are referenced going forward as General Projects. General Projects can be set up to allow for burdening or not based on the template chosen by the user.

Project Classifications and Naming conventions:

Classifications:

Name Code Description

Event Events

Short-term efforts to stage a particular event, such as a conference

Service Agreement Research Service Agreement Efforts where UCSD hands are doing work for third parties – must be created by KR integration.

Service Agreement Non-Research Service Agreement Efforts where UCSD hands are doing work for third parties, unrelated to Research.

Line of Service Recharge Operation An operation that recovers costs from other UCSD entities.

Line of Service Auxiliary An operation that recovers costs from the public.

Course Academic Credit-granting courses offered by the campus.

Course Extension Courses solely provided by University Extension.

Course SAPD Strategic Academic Program Development (courses offered by the academic colleges to the public). Project-Owning Organization is always the academic department.

Cost Tracking Faculty Start up Monies allocated to a new faculty member.

Cost Tracking Faculty Retention Monies allocated to a faculty member as part of salary negotiations.

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Cost Tracking Faculty Discretionary Unrestricted monies allocated to a faculty member.

Cost Tracking Clinical Administration Non-research efforts for the clinical practice.

Cost Tracking Committee Cross-campus committees.

Cost Tracking Team Organization unit at a level below the Financial Unit structure.

Cost Tracking Campus Fellowships UCSD-funded student support.

Cost Tracking Non-capital construction Facilities improvements and renovations below the threshold to be considered capital improvements.

Cost Tracking Committed Reserves Monies committed to specific endeavors.

Cost Tracking General Reserves Reserve funds that need to be earmarked at a more granular level than Fund allows.

Cost Tracking Recharge Recipient Project created purely for receiving recharges and mapping them to the appropriate Fund/Function/Location/FinU

Cost Tracking Non-Sponsored Research Award Research awards from gift or internal sources

Cost Tracking Operations Projects created that track costs that support organization operations

Cost Tracking Other Any effort best modeled in PPM that does not fit into an established Class Category and Code.

Financial Allocation Model Block Grant

Financial Allocation Model Combined/Other student support

Financial Allocation Model GSGEI

Financial Allocation Model MAS

Financial Allocation Model Master’s Growth

Financial Allocation Model TA

Financial Allocation Model Temp FTE

Prefixes for project naming:

Funds for Graduate Student Block Grant

Funds to support student related activities not otherwise represented

Funds to support GSGEI

Funds to support MAS student programs

Funds to support Master’s Growth

Funds to support TAs, Readers, etc.

Funds to support temporary FTEs

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Capital Project

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General Project Cost Tracking Non-capital construction NCCON

General Project Cost Tracking Non-Sponsored Research Award NSRA

General Project Cost Tracking Operations OPS

General Project Cost Tracking Other OTHR

General Project Cost Tracking Recharge Recipient RCR

General Project Cost Tracking Strategic Initiative SI

General Project Cost Tracking Team TEAM

General Project Financial Allocation Model Block Grant

General Project Financial Allocation Model Combined/Other student support OSS

General Project Financial Allocation Model Dept Support Model DSM

General Project Financial Allocation Model Faculty Compensation

General Project Financial Allocation Model GSGEI GSGEI

General Project Financial Allocation Model MAS

General Project Financial Allocation Model Master’s Growth

General Project Financial Allocation Model Summer Session

General Project Financial Allocation Model TA TA

General Project Financial Allocation Model Temp FTE TFTE

Project Statuses

Active Project is Active and costs can be posted in PPM to the project

Closed Project is Closed and no activity can be posted in PPM to the project

Closed – DNU Bad Record Project is closed because it was created in error and no activity can be posted in PPM to the project. Should not be reactivated.

Draft Project is not yet finalized; no activity can be posted in PPM to the project. Not currently used at UCSD

Rejected Project approval was rejected; no activity can be posted in PPM to the project. Not currently used at UCSD

Submitted Project approval is submitted; no activity can be posted in PPM to the project. Not

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currently used at UCSD

UCSD Closed Project is Closed for business process reasons; Cost adjustments in PPM can still occur, but not new transactions. UCSD use for 20-21 was the same as Closed; is no longer actively used

2.1 Capital Projects

Capital Projects represent large construction projects that will be converted into capital assets upon project completion. Capital projects include new construction, renovations, landscape projects and infrastructure projects, and typically utilize a blend of funding sources. Capital projects are used to record asset costs, calculate capitalized interest, and group costs and assets.

Capital Projects have the department that is running the project as the Task-Owning Organization. The Project Owning Organization for Campus capital projects is Net Investment in Capital Assets (NICA) as the Financial Unit (FinU) and for Health capital projects, it is their Balance Sheet FinU.

Project transaction controls are available for Capital Projects. Transaction controls limit the number of allowable expenditure types, and these are setup when the project is created. The list of allowable expenditure types can be viewed by navigating to Projects, search for the desired project, from the menu click Manage Project Financial Settings, and select Transaction Controls or through reporting: bah.ucsd.edu>Department Exceptions Panorama

2.1.1 Inventorial Equipment

Inventorial equipment has a total acquisition cost of $5,000 or more, and it is tracked in the Campus Asset Management System (CAMS). The head of the department and the principal investigator are responsible for the care, maintenance, financial records, physical inventory, and control of equipment. A department’s property administrator takes care of the actual identification and tracking of inventorial equipment with the department. See What Property Administrators Need to Know for more information.

2.1.2 Fabrications for General or Sponsored Projects

Fabricated equipment is constructed by UC San Diego departments for use by the University upon completion and must qualify as a piece of inventorial equipment. Departments are no longer required to submit a Fabrication Request to the Equipment Management Office. The fabrication identification (FAB) number has been replaced by the POET(AF) and fabrication related expenditures are tracked in Project Costs.

Departments, in cooperation with the Office of Contracts and Grants (OCGA), Sponsored Projects Finance (SPF) and Internal Controls and Accounting (ICA), are responsible for the classification, budget approval, expenditures and accounting of equipment fabrications. Departments are responsible for reporting fabricated equipment to the Equipment Management Office upon completion.

Depending on funding source, work with Sponsored Projects Finance (SPF) or Internal Controls & Accounting (ICA) to create a Project and Task for the fabrication in OFC PPM using PADUA. To close out or cancel the fabrication, submit a

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request to the Equipment Management Office to enter CAMS and a separate ticket to ICA for the capitalization using the Services & Support portal.

2.1.3 Budget

The Project Budget must be completed/baselined in order for costs to be incurred for Capital Projects. Capital Program Management and ICA-Plant Accounting are responsible for setting up the initial budget as well as future budget modifications in the Project Financial Plan module. Currently, ICA-Plant Accounting or Health Business Office will review and approve budget versions.

Budgets can be entered at resource category levels which match with the Expenditure Categories. Budgeting at the resource category that expenses are planned in will assist with accurate reporting and performance monitoring.

Budgets for Capital Projects should reflect the approved amount of the Capital Project. This does not reflect the resources transferred in the GL.

2.1.3.1

Steps to create a budget

 Go to Projects> Project Financial Management and search for project.

 Click on the Project and go to Manage Project Budget. You will be directed to the Manage Budget Versions Page

 Click the ‘+’ sign or use the drop down to choose Create Budget Lines Manually

 Click on the task row 1 (or task to add resources to). Click on the + sign underneath the field header Resources.

 Click down arrow under Resource. From the drop-down box, select the appropriate Resource Category you are budgeting for. There are seeded resources (Financial Resources, Equipment, Labor) that are NOT recommended to use as they do not align with our expenditure types.

 Enter in Project Budget Amount

 Scroll to the bottom of the screen. Select Save and Close

 Repeat above steps as needed for additional tasks and/or resources.

 You have 2 options at this point:

o If you're not finished and want to come back at a later time, click Save in the upper right-hand corner. This will allow you to come back at a later time to complete the budget assignments.

o Once you are finished, click the Submit button in the upper right-hand side.

 Your budget will now be in the Budget Approval Workflow process. It will be considered a working version until it has been approved. Once it has been approved, the system will display ‘Current Baseline'.

The Baseline version is what the system uses for calculations in reports. You can also create additional versions to mockup different scenarios of budgeting.

2.2 Sponsored Project

Sponsored projects represent an activity that is sponsored, or funded by an external organization, such as a federal, state, private organization, or agency in which a formal written agreement, i.e., a grant, cooperative agreement, or contract is entered into between the University of California, San Diego and the sponsor.

Sponsored projects class category includes Research, PI Initiated Clinical Trial, and Sponsor Initiated Clinical Trial. The research category is for traditional grants for research projects. These projects are created automatically through an

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integration with Kuali Research (KR) and the award is set up by Sponsored Projects Finance (SPF). These projects have Awards and Funding Sources established. The Award number is always the base KR Award Number, and the External Funding Source is always the KR Sponsor Name.

Project transaction controls are available for Sponsored Projects. Transaction controls are used to specify the type of transactions that are non-chargeable for the project and tasks. The list of unallowable expenditure types (aka E codes in the legacy system) can be viewed by navigating to Projects, search for the desired project, from the menu click Manage Project Financial Settings, and select Transaction Controls or through reporting: bah.ucsd.edu>Department Exceptions Panorama.

Additional Training on Awards can be found through Blink FIS Training and on the STaRT Tool

2.2.1 Awards

Awards represent a pool of money that projects may draw upon. One award may be associated with multiple projects, and each project will only be associated with one award. Most awards will be automatically generated through an integration with KR. By default, awards are set up with one project and one task. Additional projects or tasks may be created for the following reasons:

 New Competitive Segment (new financial document number from sponsor)

 New Notice of Award (NOA)/Research award

 Additional Project Owning Organization/ Financial Unit

 Separate yearly billing

 Separate billing method

 Cost sharing

 Program income

 Concurrent burden schedule

 Fabrication

 Restricted buckets of funding such as NIH TG and NSF REU

 Restricted supplemental funding

 Program projects or sponsor required work breakdown structure/task level programmatic tracking  Provide spending controls for co-PIs

Subawards (see section 2.2.7.1)

Fund Managers can request additional projects or tasks through Services & Support. It is recommended to limit the number of tasks to the above reasons.

Awards and Contracts

In the Oracle Financial Cloud system, The Grants Management Module manages Award data. The Contract Module manages Contracts. All Awards are Contracts, but not all Contracts are Awards. Contracts is the basis for how Oracle designed a Grants Management solution. However, Contracts can be used for non-sponsored projects not associated with a research award, such as a service agreement (See General Projects section of this guide). The OFC Awards module

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is an extension of the Contract Module, and when a new Award is created via the KR integration, OFC is creating a special type of Contract with additional fields behind the scenes. This is why the Award Number on the Miscellaneous Cost Import file (“MCI” - PPM FBDI file for cost import) and similar interfaces is called the “Contract Number”, and certain screens will say “Submit Contract” instead of “Submit Award.”

2.2.1.2 Award Funding

Award funding is based on the Notice of Award from the sponsor as entered in Kuali Research. Funding is then allocated to the project(s). Budgets are then created at the project/task level. Project budgets must be within the funded amount as this is an Oracle control.

For awards that are at risk of not receiving the full awarded amount, such as clinical trials, the funding is at the ceiling that the sponsor allows and then the budget is initially created by the central office at the same ceiling amount. Departments can edit the budget (create a new version) to a lower amount if desired for PI reporting.

Additional information in Awards Training

2.2.2

Billing

The Sponsored Project Accounts Receivable and Cash Management (SPARCM) system is used for sponsored project billing. It is designed to create invoices and manage Financial Expense Reports (FERs) and Sponsor Required Financial Reporting. It serves as a repository for all invoices created during the life of the award.

SPARCM allows departments to:

 View invoices submitted to sponsors.

 Create Industry Sponsored Clinical Trial invoices.

 Track withholding amounts for final invoices.

 Submit electronic Financial Expense Report (FER) to SPF.

 Track upcoming FERs due.

Billing frequency, terms (net 30 preferred), and billing contract information must be indicated in any agreements for services and/or goods between UC San Diego and external organizations. The university’s common billing address must be used to ensure monies are collected centrally to be properly applied and reconciled to open receivables. Each department incurs the financial risk and assumes the liability for all unpaid past due balances. This includes resolving deficits incurred because of any uncollectible balances leading to a write-off. The department in consultation with the Accounts Receivable office must continually assess the ongoing financial risk to the university of continuing to provide products or services on behalf of any delinquent customer. Late fees may be assessed and collected by the Accounts Receivable office.

SPARCM is integrated with the Contracts Management billing module in Oracle Financials Cloud. Billing events are automatically created when invoices in SPARCM have a posted status. Sponsored activities are secured and paid in two ways: cost reimbursable or fixed price.

Letter of Credit awards are billed through Oracle (not SPARCM) using native Oracle PPM Billing functionality.

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2.2.2.1

Cost Reimbursable

For activities that are cost reimbursable, the University fronts the expenses, and the sponsor is then invoiced accordingly for allowable and reasonable expenses, in accordance with the terms of the contract. However, the costs cannot exceed the award amount. Any excess of spending over the award amount is the responsibility of the department and must be cleared within 120 days of the award end date. Review the Sponsored Research Deficit Procedures for more information.

2.2.2.2 Fixed Price

If the grant or contract is fixed price, the activity is negotiated at a pre-set amount, regardless of actual costs. If the costs incurred are more than the award amount, the cost overrun will be covered by the corresponding PI/department. Actual project costs are not reported to the sponsor. The sponsor is invoiced based on a pre-determined schedule in accordance with the terms of the contract. If there is a residual balance (income exceeds expenditures), the department may be eligible to retain these funds. Depending on the invoicing terms, a final invoice may be necessary before closing the award account. See Fixed Price Policy and Closeout process.

2.2.3 Sponsored Project Revenue Recognition

Sponsored Project revenue is based on when the invoice is billed, regardless of billing type.

Sponsored Projects Revenue is accounted at the fund and financial unit-not with the Project segment in the COA string. This is because the balance segments are fund/financial unit. This will continue to be reviewed with the SPARCM replacement project, currently slated to begin in December 2022.

2.2.4 Overhead Assessment – Indirect Costs - Burden

Indirect Costs (IDC) are charged to Sponsored Projects Awards based on the Federally Negotiated Rate or agreement with the sponsor. More information can be found here: https://blink.ucsd.edu/research/preparing-proposals/idcfacts.html

IDC is referred to as Burden in Oracle. Burden Structures are set up to include appropriate expenditure types that are subject to IDC. The Burden Schedule then applies the assessment at a set rate and creates the costs daily. Previously, Burden was calculated and assessed daily and summarized by costs of the same Expenditure Item date and expenditure organization. As of 11/5/21, Burden is calculated and assessed daily on a per transaction basis.

Indirect Cost Recovery (ICR) is the campus recovery of this IDC that the Campus Budget Office manages and distributes to campus to support the research function.

Additional information on IDC can be found here: Understanding Burden Schedules

2.2.4.1 PI-Initiated vs Industry-Initiated Clinical Trials

A study is considered a clinical trial when it contemplates the controlled, clinical testing in human subjects of investigational new drugs, devices, treatments, diagnostics, or comparisons of approved drugs, devices, treatments, or diagnostics to assess their safety, efficacy, benefits, costs, adverse reactions, and/or outcomes. Studies may be conducted under an industry-developed protocol or a principal investigator-developed protocol.

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Responsible Pre-Award Office

Protocol

Indirect Cost (IDC)

Funding Source

PI-Initiated

Office of Contracts and Grant Administration (OCGA)

 Authored by UC San Diego Investigator within the course and scope of his/her University employment; or jointly with an employee of another entity.

 30% IDC assessed on total direct costs.

 Non-profit organization-funded clinical trials are subject to the sponsor policy for IDC.

 Federally funded clinical trials are subject to the applicable federal negotiated rate

May be funded by a for-profit, nonprofit, state, or federal agency.

Industry-Initiated

Office of Clinical Trials Administration (OCTA)

 Authored by a non-UC San Diego employee, or a university investigator under a personal consulting agreement and without use of university facilities in accordance with UC Policies.

30% IDC rate assessed on revenue.

A for-profit entity must be the source of funding.

Native Oracle functionality is that the IDC is assessed in PPM on project costs and then accounted for in the GL. For UC San Diego, this is true except for Industry-Initiated Clinical Trials. IDC is calculated outside of Oracle based on revenue in the general ledger and then posted via journal entry in GL and the IDC expenses are loaded to PPM Project Costs to be reflected on the project.

2.2.4.2

Understand Burden Cost vs. Raw Costs

Raw costs and Burdened costs can be found in Projects > Costs > Manage Project Costs

 Raw Cost in Provider Ledger Currency = Raw Cost in Project Currency = Raw Cost in Transaction Currency

 Burdened Cost in Provider Ledger Currency = Burdened Cost in Project Currency = Burdened Cost in Transaction Currency

It is recommended to use burdened costs in reconciling projects because it shows the burden or indirect cost charged on the project using expenditure type 538000 - FandA (IDC) – Expense.

Raw cost is the direct cost. IDC/Burden is calculated as a separate cost and shows in the burdened cost column. IDC is not calculated with the single direct cost line item because the raw cost and burdened cost would be two different amounts on the direct costs.

More information: PPM Raw Costs vs Burden Costs

2.2.5 Budget

The Project Budget must be completed and baselined in order for costs to be incurred for all types of awards. Fund managers or department designee receive an email notification when the award is ready for budget creation. They are responsible for setting-up the initial budget as well as future budget modifications in the Awards module. Budget

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modifications that require prior approval from the agency will need to go through the appropriate contracts’ office, OCGA or OCTA, and be reflected in KR.

Budget creation defaults as follows when Fund Manager fails to complete the budget:

 Resource Category: Operating Expenses = Total Direct Cost

 Resource Category: Indirect Cost = Total Indirect Cost

SPF Award Accountants review and approve budgets, process re-budgeting between projects and restrictions to budget resources for NIH awards where carry over requires prior approval, and any other financial restrictions per the Notice of Award. During the award close out, the fund manager or the award accountant is able to process a deallocation from the project budget to match final invoice or final report. For more information, see How to Manage Sponsored Project Budgets in OFC PPM.

Sponsored project budgets are based on burdened costs. It is recommended to hide/ignore the raw cost column when managing project budgets. Also note that budget versions in OFC are cumulative, therefore when modifying budgets, previous year allocations must be included, otherwise, there could be unbudgeted amounts on the project.

2.2.6

How to Check Award Budget, Costs, and Balances

Generally, Sponsored Projects are managed based on the Budget vs. actuals. The Funding generally matches the Budget. There are cases, such as clinical trials where it might be prudent to set the budget at a lower amount than the funding to control the available balance on PI reports.

The Revenue and Cash Received are managed outside of the Award space and are important to be aware of but is generally managed by Sponsored Projects Finance (SPF). To see the revenue on an award, please use the Cumulative Research Report and to see the outstanding AR, please see the Sponsored Projects AR Aging report.

Budgets, costs and balances can be viewed using the following screens:

 Awards> Manage Awards: view Budgets, Inception to Date Actual Expenses, Total Commitments, and Balances.

 Projects> Costs> Manage Project Costs: view details of the actual costs on projects and awards.

 Projects> Costs> Manage Project Commitments: view all Committed Costs

 Projects Panorama report on reports.ucsd.edu

To learn more about reviewing budget, costs and balances, see How to Check Award Balances/Expenses Additional reporting available at reports.ucsd.edu.

2.2.7

Unique Sponsored Projects Processes

This is not all-encompassing for processing and managing every aspect of sponsored projects, but is intended to discuss unique, not as common processes.

2.2.7.1

Subawards/Subcontracts

Proposals may include work to be done by one or more other institutions. In this case, the other participating institutions become subrecipients under the University of California, San Diego’s prime award. PIs/departments must

PPM User Guide

address specific questions regarding subcontractor suitability, selection and potential conflicts of interest prior to the establishment of a subcontract.

Subcontracts are initiated through OCGA and managed through KR. Approved subcontract invoices are integrated from KR to OFC AP and PPM to pay the subcontractor and reflect the expense.

To track regular and intercampus subcontracts/subsites without creating a task for each, follow steps from the How To Manage Subcontracts/Subawards in OFC PPM KBA in Services & Support.

Subawards are entered as a commitment in Oracle to reflect the obligation to pay the subaward. See Commitments in OFC for more information.

2.2.7.2

Fabrications

Dedicated projects are created for Fabrication costs and are set with a 0% IDC rate. Any appropriate expenditure type can be charged to the task. If a fabrication is cancelled, please transfer those costs to the applicable project/tasks(s) and burden would then be assessed.

See section 2.1.2 above for additional information on the process.

2.2.7.3

Cost Sharing

In cost sharing, the university commits resources to projects/research awards that are funded by external sources, usually in the form of contracts or grants. UCSD’s cost sharing resources can include staff time, supplies and materials costs, equipment costs, or commitments from outside partner organizations (3 rd party cost sharing).

The award accountant designates one or multiple internal funding sources for cost sharing commitment in Funding Sources panel within the Financial tab of the Award space. The department is responsible for identifying and providing to SPF the source(s) the department will be using. If the desired internal funding source is not available, SPF submits a Services & Support ticket to Information Technology Services (ITS) to create the funding source based on the fund provided.

2.2.7.3.1

Cost Sharing Projects

An additional project will need to be set-up on the award to track the cost sharing transactions. If burden is required on cost share transactions, the appropriate burden schedule will apply and accounting nets to zero based on the funding source used in the POETAF. For the first 2 years, burden schedules with prefix “INT” will need to be assigned to the cost share task in the Project Burden Override screen. It is important to know that Burden or Indirect costs assessed will zero out accounting wise using internal burden schedules. At go live, guidance was to have a separate task. This process still works and awards were not reconverted, but separate projects provide more visibility and control for management to departments

2.2.7.3.2 Funding Allocation and Budget on Cost Sharing

Sponsored Projects Finance (SPF) will allocate the funding from the identified source. Budget can then be allocated just like any other sponsored budget allocation. See 2.2.5 Budget section for more information.

2.2.7.3.3

Type of Costs

Cost Sharing Costs

Direct Cost Cost share commitments identified in the proposal or as stated in the Notice of Award (NOA) will need to be identified up front or at the beginning of the award period and charged to the cost sharing task/project created on the award. Or, cost transfers will need to be done after the fact.

Converted Cost Task 0 internal funding source(s) was created for all converted cost share tagged in the legacy cost sharing system. If the source fund was in the cost sharing system, that specific internal funding source was converted to the award. Otherwise, the generic “internal” was used. Departments will need to confirm/provide the specific internal funding source to the award accountants before spending can occur on Task 0.

2.2.7.3.4

Non UCSD or 3rd Party Cost Sharing

Third party cost sharing is when UC San Diego agrees to cost-share expenses that are incurred through an outside entity. During award set-up, the award accountant will designate an internal funding source called 3rd Party Cost Share for cost sharing commitment in the Funding Sources panel within the Financial tab.

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When non-UCSD entities are involved in a project, the department will need to submit a Services & Support ticket to provide evidence of their cost sharing expenditures. The evidence will be uploaded to the award in Oracle, and the award accountant will create a new task and manually add the cost using the expenditure type 539505-3 rd Party Cost Sharing. The cost will zero out when posting to the ledger.

2.2.7.3.5 How to Review Cost Share Costs and Accounting

To review cost share costs:

1. Navigate to Awards

2. Click on Manage Awards

3. Search for Project/Award Number

4. Click on the Award Number and drill down to the desired Project with Cost Sharing

5. Select Manage Project Costs to see all the costs on the project.

The search can be filtered for the internal funding source or view costs based on the cost sharing source.

To review accounting:

1. Highlight the desired cost, click on Actions

2. Select Accounting

3. Click on View Accounting

This example shows the Fund for the cost is the internal funding source charged to the Project Owning Organization’s Financial Unit.

2.2.7.3.6 Cost Sharing FAQs

How does my GL reconcile with my cost-sharing?

Your expenses that are charged to your cost-sharing will be charged with the SP project number in the chart string, but a different fund from the externally sponsored portion. If you need to move resources in the GL to “zero out” the fund/FinU, process a journal.

Example: NSF award with cost sharing being met by SOFI

Expense to the NSF portion: 16110.20000.1000020.522401.440.000.000000.1234567.000000.00000. Expense to the SOFI portion: 16110.13991.1000020.522401.440.000.000000.1234567.000000.00000. SOFI resource: 16110.13991.1000020.774009.000.000.000000.2345678.000000.00000.

Optional Journal in GL

CR 16110.13991.1000020.774009.440.000.000000.1234567.000000.00000. DR 16110.13991.1000020.774009.000.000.000000.2345678.000000.00000

What if my Cost-sharing is being met by another Department?

There are two options depending on the accounting requirements.

1. Create new project with that other department project owning organization. When you charge costs to this new project, the expenses will post to this other dept FinU.

2. Other dept transfers the resources to your FinU, same project number, different fund. Create a separate task to track this separately, if desired.

PPM User Guide

What chart string do I enter for UCPath?

Use the same chart string that you would for your sponsored project, but make sure to enter the FUNDING SOURCE that is appropriate for your cost-sharing. This will ensure that the same controls for your sponsored project will be applicable to the cost-sharing commitment. The accounting is derived from PPM when the payroll is posted, so the appropriate cost-sharing fund as setup by your internal funding source will be charged.

How do I record cost-sharing that is being met by another sponsored research award?

This is a very rare situation, but if you do have this, please follow the instructions for 3rd party cost-sharing and make sure that your documentation is very clear that it is approved and that the costs are not being cost-shared on any other award.

See https://ucsdcloud.sharepoint.com/sites/STaRT/ofcppm/SitePages/OFC-PPM-Department-Guide-to-Managing-CostSharing.aspx For more information

2.2.7.4 Program Income

2.2.7.4.1 Definition

 Gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the award.

 Includes, but is not limited to, income from fees for services performed, and any registration or other fees paid by conference participants or sponsors.

2.2.7.4.2 Process

 Unless stated otherwise in the terms of the award, program income received during the period of the grant is retained by the grantee and added to the funds committed to the project and used to further project objectives.

 Record program income on a separate task with internal funding source “Program Income” P12000.

 Assign “No IDC 0.0” to the program income task.

 Income will be posted as miscellaneous cash receipt in the Manage Project Cost screen in PPM under expenditure type “405401 - Program Income on Sponsored Research”.

o This will automatically post as a negative cost when the Project, Task and Funding Sources is entered in the Receipts module in Oracle.

 Record Costs on the separate task setup for program income.

o The F in POETAF is Funding Source number P120000, Funding Source Name: Program Income.

 Expenses and income earned must be included in the financial report when required by the agencies.

 The process for billing to receive the program income is still being determined.

2.2.8 Sponsored Research Dates

Awards have many dates, all of which control the ability to charge to awards.

2.2.8.1 Expenditure Item vs. Creation Date vs Accounted Date

 Expenditure Item (IE) date: date transaction incurred (must be within project period).

 Creation date: date transaction posted in PPM.

PPM User Guide

 Accounting Date: In the Manage Project Costs search screen, the accounting period is the “most recently updated” accounting period. This is not always equal to the original accounting period that the cost was created and accounted in.

For example, a lab supply is purchased on 3/1/21, but the invoice is paid to the vendor on 4/1/21. The EI date is 3/1/21 and the creation date is 4/1/21.

2.2.8.2 Pre-Award - Spending on Federal and other sponsored Awards

Pre-award costs are those incurred prior to the effective date (usually 90 days) of the Federal award directly pursuant to the negotiation and in anticipation of the Federal award where such costs are necessary for efficient and timely performance of the scope of work. Such costs are allowable only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency.

Specify the pre-award date to track expenditures incurred before the award is formally received in OFC PPM Awards space. The Project dates will then be in line with the pre-award date and so costs with EI date that is within the PreAward Period will post to the project even though the Award start date is later than the project start date.

The Pre-Award cost date can also be utilized for those awards that have approved advanced spending via OCGA. This advanced spending approval would flow from KR with documentation of advanced spending without official Notice of Award (NOA) from agency.

2.2.8.3 Project and Award End Dates

Project End Date: Date project ends

Award End Date: Date Award ends, this is derived from the CONTRACT end date in the Contract Module

Generally, the Project End Date=Award End Date. This can be different if there are multiple projects on the same award.

Oracle functionality (not a configuration) is such that:

 EI Date must be within project end date, regardless of accounting posting date.

 Budget Period dates, regardless of accounting posting date. Budget periods are defined on the NOA and allows for budgeting at period and controls carryforward spending. Converted awards all have a single budget period.

 Control budget dates: these are the dates of the GL control budget set by the baselined Award Project budget.

 Sponsored Projects expenses are allowable if they are incurred during the award.

 Contract (Award) dates, regardless of accounting posting date.

o Project End Dates cannot be backdated once sent.

o Budget Period Dates cannot be backdated once sent (Oracle functionality and is a highly rated enhancement request from the Grants community)

o Award End Date will also stop transactions from posting, but we are able to manually adjust the end date to a future or past date.

o Contracts drive billing controls (dates and dollars)

o Close Date: This is set by SPF and will generally be 30 days past the award end date. This will allow costs to post as long as the EI date is within the other dates outlined above.

PPM User Guide

In legacy IFIS, if costs posted to the ledger after the award end date, departments had to justify they were incurred during the time of the award. In Oracle, the departments need to provide the correct EI Date, which is a system-driven control for Sponsored Research. Expenses must be within all of the above dates to post as a project cost in PPM.

To check the various dates on your award, please use the Award Projects Dates Report

2.3 General Projects

General projects can be defined as an activity or event with a single purpose that may be executed over a specified period of time such as a conference, a course, a research project, departmental operations, etc. General projects are not sponsored or capital projects. They may cross fiscal years and have a predetermined budget (often managed separately in EPBCS). All general projects have at least one task which is used to differentiate various components of a project. A project may have multiple tasks. Separate projects are needed whenever there is a need to track budgets and expenses separately.

A default project is a type of General Project and is available for each Financial Unit in the Chart of Accounts. This project may be used for recharges or other transactions that come from the general monies of a department. The fund is often university core funds SOFI (13991). UC Path payroll transactions may post to a default project when an employee does not have a funding source (sponsored projects), is posting to an ended project or has some other expired data element. Recharge Operations may post to a default project when the provided POETAF has expired or if customer does not provide a specific project for the charge. The naming convention of the project name is DFLT <FinU#>. As long as general projects are optional, transactions in DFLT may still be correct/allowable.

All requests to update projects or create new non-sponsored projects are handled through PADUA 2022 guidance was updated to clarify that project elements that impact accounting cannot be updated once there is activity on the project. See KB0034002 for more information.

Departments may choose to use general projects to track financial activities. Some examples include:

 Non-Revenue Activities

o Core funds

o Faculty funds

 Revenue Generating Activities

o Academic Courses

o Recharge operations* (can only be processed via PPM so projects are required)

o Service agreements

o Contracts between UC San Diego and external organizations

o Gifts & Endowments

 *Note, Revenue may or may not be generated in PPM for the above activities. See below for more specific examples.

2.3.1 General Projects Structures

Departments must determine when to track costs for individual projects at a task level and how many tasks are appropriate. All projects have at least one task, which is created at the same time as the project in PPM. More tasks can be added to a project any time after creation as needed. For example, a project is set up to track Events. Individual tasks can be set up for specific events, such as Triton Day, Commencement, and New Student Welcome. More tasks can be added when new events are planned.

PPM User Guide

Use Project & Task when you need a way to track resources and expenses for anything more detailed than Financial Unit, Fund, and Function. Examples include ad-hoc commitments, recurring granular operating budget, faculty start-up, internally funded grants, service agreements.

There are two options available:

1. Use financial plan/budget in PPM at the task level to reflect resources

2. Use project (with single task) as lowest level of granularity and report mostly out of the GL.

-Most areas already use Projects and Tasks this way, fits with original design decision.

-Already works with PPM based reporting.

-Sponsored, Capital & General Projects can use same reporting.

-Could transition easily if/when Oracle adds resource functionality to PPM Tasks.

-Allows for full P&L (budgeted vs actual for resources and expenses) at lowest level.

-Resources are automatically accounted for at the lowest level without any manual adjustments.

-Potential solution for all general project types.

-Budget definition remains “target” instead of “authorization to spend”.

-Requires manual updating of budget to account for new resources.

-Does not show budgeted resources vs. actual resources.

-Repurposes PPM budget to mean something different (authorization to spend) rather than campus accounting budget definition (target).

-No automated controls for budget entry amounts (no check against actual resources, could have double counting).

-Requires restructuring of every General Project Task to a new Project.

-No automated way to link related Projects for reporting.

-Sponsored Projects and General Projects are reported differently.

-Differs from original design decision of thin General Ledger.

Example: Ad-hoc academic initiative receiving $30,000 campus funding from different purposes and spenders. $5,000 student organization support, $10,000 Speaker Series, and $15,000 Director Discretionary. Same FinU, Fund, Function, Program, Activity, and Location.

PPM User Guide

Solution: Use Project & Task as follows

Decision Tree for each Project/Activity Type

2.3.1.1

Definitions of Concepts to Consider when Structuring Projects

 Resource: External Revenue, internal fund balance transfer, or intra-location fund balance transfer that may be available for use. This may or may not reflect actual cash received. Judgement must be used prior to expenditure, looking at timing of receipt of cash.

 Resource Transfer: A balance transfer that nets to zero within a fund, and crosses one or more other segments in the General Ledger.

o For example, if a resource transfer is done between 2 project segments, all other segments remaining the same, this transfer changes the net position of the projects—one increases and one decreases.

 Allocation: A distribution of financial resources to the campus or a campus unit which can be either recurring or one-time. Recurring allocations from central resources to campus units will occur monthly with Oracle. One-time allocations will occur annually.

 Net Position aka Entity/Fund Balance: Difference between assets and liabilities, which increases with revenue and decreases with expenses.

 Budget: A budget is a financial plan of anticipated Resources and/or Expenses for a defined period.

 Budget Balance: Budget – actuals. This is also referred to as Performance monitoring.

 PPM Budget (Financial Plan): PPM functionality to set performance target within PPM at task level.

 Cash: Actual cash received. This is NOT equal to Revenue.

2.3.1.2

Factors to consider

A main determining factor for creating projects with 1 task or many tasks is at what level you need to track resources vs. expenses and at what level you need to track your planning vs. actuals for a unit of work. Some questions to consider:

 How do you define what is “available to spend”?

 Is it planned expense (Budget) versus actuals? Is it actual resources (cash, revenue, allocations) versus expenditures?

 Who or which unit is responsible for overseeing the resources (cash, revenue, allocations) associated with the project?

 Do you need to report on the revenue by this distinct item (such as gift payment received, task, expense)?

For example, in your personal checking account; you get a $1000 paycheck in your checking account for 10 types of expenses (mortgage, utilities, water, groceries, etc.). You have a separate budget for your planned spending of those 10 expenses in your checking account, not 10 different checking accounts. This scenario would be equivalent to one project

PPM User Guide

with ten tasks. All the resources are in the checking account (aka General Ledger) and the expenses are commingled in the project segment in the GL but are distinguished by separate task numbers to facilitate tracking against performance (budget) targets. The PPM budget does not need to be adjusted to match the actual expenditures at task level, but rather variance of actuals against the plan help to explain the net surplus/deficit at the overall project (checking account) level.

In contrast, if you separately transfer $100 to another checking account for your vacation fund, this scenario would be equivalent to two projects, one with 9 tasks and one with one task. The determining question becomes: Is it required to see an individual check book (financial) balance that compares resources against actuals, or will budget-to-actual variances at the task level suffice in that they help to explain the overall financial balance within a composite project?

Downside to many projects:

 Ad-Hoc Project Grouping is not available.

o However, grouping is available via project classifications, PI, Project Owning Organization. Additional solutions for ad-hoc grouping are being examined. See section 2.4 for more information.

 The original plan of having a thin general ledger was intended to avoid overloading the GL with project numbers.

Downside to many tasks:

 Revenue and resource transfers are not reflected at the task level potentially limiting reporting granularity.

o However, Contract based revenue is available at the task level.

2.3.1.3 Business Case Examples

2.3.1.3.1 Example 1: Faculty Discretionary Accounts

A department is creating projects/tasks for Faculty Discretionary Accounts. Is it better to create one project for all Discretionary accounts in the department or separate projects for each faculty member?

Step One: Define what your “available to spend” is. Is it a plan vs. actuals (performance tracking) or is it resource vs. Actuals (financial balance)?

Answer: This case would be resources versus actual expenses (financial balance).

Step Two: Identify who is the primary stakeholder who is spending and overseeing the account. Are there multiple or is there just one?

Answer: In this case there are multiple faculties with responsibility for their discretionary accounts.

Step Three: Identify who “owns” the resources tied to the account (e.g. Faculty or Department). Suppose Dr. Smith has $25,000 in discretionary. The resources come from remaining fund balances from prior years as well as allocations made in the current year. The resources may be spent in the current fiscal year, or they may be spent in future years as needed by Dr. Smith.

For this example, it is best to set up a project for Dr. Smith’s Discretionary. This way the resources in the GL are associated with a project that is uniquely linked to her. Remaining fund balances at fiscal year-end will stay in the project and be associated with her easily. If she wanted to group expenses for tracking against specific spending

PPM User Guide

plans, she could have separate tasks, but if not, it is simplest to keep everything on task 1. Then reporting is simplified; if she spent $10K out of the $25K the report would display the available remaining balance as $15K.

If Dr. Smith’s discretionary was set up as a task under a departmental project, then it would be more difficult to determine which resources are associated with her versus the faculty using the other tasks.

2.3.1.3.2 Example 2: Department resources

CBO provides $100K resources for the Department of Basket Weaving. The Department has full discretion in how to spend the resources. Department decides to plan to spend $50K for administration, $25K for Basket Weaving for UN and $25K for GR courses. It is important that the department does not overspend $100K, but it is ok to shift spending within these 3 groups if needed.

Set up 1 project with 3 tasks. Set up PPM Financial Plan with 50/25/25. Use reporting to track plan vs. actuals. The GL will show the actual resource allocation to the GL.

2.3.1.3.3 Example 3: External Revenue: Service Agreement

 Setup Project per PI/per Project Manager

 Setup Task per Service Agreement

 Setup Contract per customer/Service Agreement

In this example, the PI has spent $14K more than has been received so far. The PPM Budget is set up with the maximum amount of the service agreement. The PPM Budget balance for the first agreement indicates that $5K is the remaining amount left to spend. The task financial balance shows that the $10K has not yet been billed or collected from Service Agreement 1 and $1K is left to spend on Service Agreement 3 and $4k to bill and collect.

PPM User Guide

2.3.1.3.4 Example 4: PI Smith has three gifts

Option A: Set up 1 Project with 3 tasks; one for each gift fund.

Your report would need to be run at the task level in PPM to match the GL for the same gift. But, if you look at the PPM project level, you will see the balance for all of PI Smith Gifts

Option B: Alternately, you could setup the above example with 3 separate projects; one for each of the gift funds. This way your PPM project matches your gift fund. In this case, if you have no need to separate out the gift activities further than “the gift”, you may want to consider not using PPM at all.

If you have 1 gift fund that is being allocated for multiple PIs, you would want to separate those into separate projects so the revenue can be tracked separately in the GL. Otherwise, all revenue will be aggregated at the fund level and determining which revenue corresponds to which PI will be more challenging to track, similar to example 1 above.

2.3.2 Non-Revenue Activities

Non-revenue activities typically include internal tracking of faculty spending, and core funds. General Projects offer the ability to easily track and roll performance balances across fiscal years. Start-up funds are considered to be designated funds set aside specifically for individual faculty members over the course of several fiscal years. Faculty members and financial support staff can see their performance to actuals and expenditures within PPM.

First choose the structure as appropriate for your project (see above examples 1&2). Keep in mind at what level you are accountable for the financial balance in the GL. Financial Plans in PPM are initially loaded from EPBCS and can be edited by departments and reflect the plan for specific tasks so departments can track performance monitoring. Carryforward from year-to-year process is still being refined. A control report to compare the EPBCS Plan, the Resources in the GL and the PPM Financial Plan is under development to address the following conflict:

Deficit Monitoring will be based on the GL financial balance, looking at financial balances which reflects revenue minus expense plus fund balance (account 300000) at the Financial Unit – Fund – Project level of granularity. Thus, if a unit chooses to adjust their PPM Budget to reflect off cycle changes to their planned spend, these changes will not impact the financial balance at the GL level. The downside to this flexible approach is that financial managers will need to understand and be able to explain their financial balances (surplus/deficit) at the GL level separate from their performance against an evolving local performance target in PPM.

PPM User Guide

2.3.3 Revenue Generating Activities

Revenue is defined as External revenue, meaning the portion of resources that is not from UC sources.

 See example 4 above for Gift Revenue

 See example 3 above for Service Agreement (contract) example.

 See Cash Receipts section below for non-contract revenue.

Gift revenue is a non-exchange transaction and is recognized when a gift is received or pledged. Gifts received must be sent to Gift Processing Services in Advancement Services to be processed prior to gift revenue being recorded by the Gift & Foundation Accounting team.

Should you bill and record revenue through PPM Project Billing or the Receivables Module?

Revenue contracts are written agreements that exist between UC San Diego and external organizations for the exchange of goods or services. Revenue is recognized based on the performance obligation in the contract and the price. Revenue contracts include, but are not limited to, service agreements, consulting agreements, clinical service agreements, etc. Billing must happen through Project Billing for contract-based services. Contracts are setup per customer, but multiple contracts can be associated with a single project. Contracts can be setup with multiple projects. Other revenue generating activities might include ad-hoc revenue such as retail operations and can be billed through the receivables module.

Retail Operations: Receivables module is suggested due to the volume of revenue activities.

Non-Retail Operations: PPM Project Billing is suggested due to flexibility of setting up contracts with multiple projects and tasks. Note that recharge operations must use PPM Project billing for external revenue to reflect revenue with each service line/task.

Reports are currently available through the bah.ucsd.edu to report on revenue at the project and task level.

2.3.3.1 PPM Contract Management Module

Contracts represent agreements between the university and an external entity. One Contract as setup in the Contracts Module may be associated with many projects and have many different lines describing services and price agreements. Not all Projects have Contracts associated with them, but they are necessary to track revenue at the project and/or task level through project billing.

PPM User Guide

When creating a Contract for the first time, you can create it manually or use the Contract Template. To reuse a contract, simply duplicate the contract and make your edits, or save the contract as a contract template and use this template to create new contracts. Once the contract is submitted, it routes to the Accounts Receivable office for approval.

1. In the Create Contract window, enter the basic information required to create the customer contract such as business unit, legal entity, contract type, primary party, contract start and end date, and contract currency.

2. A contract type is a contract category that determines the nature of the contract (i.e. Service Agreements). It also specifies what kind of information can be entered including contacts, contract lines and terms.

a. If the contract lines are related to projects, enter project information.

b. If the contract lines are related to products, enter the product type information.

c. If the contract lines are related to services, enter the service type information.

3. Validate the contract and correct any errors.

4. Submit the contract for approval.

A contract moves through a variety of states throughout its life cycle, from initial drafting to negotiation to active management and eventually to contract closeout. A contract status indicates where a contract is in its life cycle, and also determines what actions and operations are permitted for the contract.

The following table describes the available contract statuses and lists those permitted actions for each status that cause a change in contract status: Status Description Available Actions Resulting Statuses Draft

The initial status of a contract

Canceled

Pending Approval

The status of a contract changes to Canceled when the draft is canceled.

The status of a contract changes to Pending approval when it is submitted for internal approval.

Active The status of the contract changes to Active when it is approved by all the approvers.

Hold The status of a contract changes to Hold when a hold is applied.

Under Amendment The status of a contract changes to Under amendment when it is amended.

Closed The status of a contract changes to Closed when you terminate it. Closed status implies either a foreclosure or a closeout after expiration.

Expired When the contract end date is reached for an active contract, the contract status changes to expired.

 Cancel

 Submit for Approval

 Create new version

 Canceled

 Pending Approval

 Draft

There is no action available that changes the status of the contract.

 Stop Approval

 Approve

 Reject

 Amend

 Apply Hold

 Close (Terminate)

 Amend

 Remove Hold

 Close (Terminate)

 Approval

 Revert

 Create New Version

 Draft

 Under amendment (if it has an earlier active version)

 Active

 Hold – if there’s an existing hold on it.

 Under amendment

 Under amendment  Hold

Closed

 Under amendment

 Active if prior to end date or expired.

 Closed

 Pending Approval

 Active

 Under amendment

 Reopen  Draft

 Amend  Apply Hold  Close  Under amendment  Hold

Closed

PPM User Guide

Bill plans and revenue plans are required in order to set billing attributes that can be shared across contract lines within a contract. The invoice or revenue method determines how to invoice or recognize revenue for the contract lines that use the bill plan or revenue plan. Select the invoice method or revenue method that has a method classification with the invoicing or revenue recognition instructions that meet your requirements. Only certain combinations are allowed in Oracle.

Gray indicates not available as of February 2021. Future configuration is to be considered.

2.3.3.1.1 Contracts Frequently Asked Questions (FAQ)

When should I use the Contracts Management Module? When you want to track revenue from customers at the project or task level.

What type of documents can I attach to a contract? Any kind of file, including images, to a contract in the Documents region of the contract Header tab. Files or URLs added in the Contract Document region can only be updated when the contract is in the Draft or Under Amendment statuses.

What happens to document attachments when I create a new contract version? New contract version inherits the documents attached during the previous versions.

How can I delete draft or canceled contracts? Select the delete action. You can delete either all versions or only the current draft. You can delete a version of a contract only if the contract has more than one version.

What’s the purpose of a customer PO number? What if I have multiple PO numbers associated with one contract? You can capture a customer purchase order (PO) while creating a contract for tracking purposes. To add multiple PO numbers, create multiple contract lines or enter a PO number per contract event.

2.3.3.1.2 How to Create a Contract

1. Click on Contract Management, then on Contracts

2. On the right-hand side, click on the Tasks icon for the drop-down menu. Select Manage Contract Templates

3. You will want to create a Service Agreement, which is for department use.

1. In the field Template Name, enter the word Service and then click on Search Select Service Agreements

Click on Actions and you will get a drop-down menu. Click on Create Contract from Template

PPM User Guide

4. Complete the field Primary Party with your customer name. Use the search function if the customer number is unknown.

5. Start Date will default to today’s date, but you can change it as needed.

6. Enter an End Date. Even though it is not required with an asterisk *, you will get an error if an end date is not entered.

7. Note that dates will drive when you are able to bill—you can only bill within the contract dates.

Overview tab

 Update the Name. It will default to Service Agreements, but you should enter a better name to identify the contract.

 Under Additional Information, enter the Revenue Account that the contract should collect revenue on. Use the search function from the drop down if unknown.

 Click Save on the top.

Parties tab

 Confirm you Customer and Supplier names.

 In the Accounts section, complete the following which are required even though they do not have an asterisk *.

o Bill-to Account Number

o Bill-to Site

o Ship-to Account Number (search by Bill-to Account number)

o Ship-to Site

 Click on Update Lines.

o Enter a Bill-to Contact, then click Update button.

Billing tab

 Enter Contract Organization, which is the UCSD department.

 In Transaction Type, enter PA Invoice. You will have to search for the words ‘PA Invoice.’

Bill Plan Section

 Click on the Plus sign icon to Create a Bill Plan and complete the following:

o Name

o Method Name select Amount Based Invoice

o Under Customer Information, make sure the required fields are populated.

o Billing Cycle select Immediate

o Payment Terms select terms or Immediate

o Under Invoice Summarization Options,

 Labor Format select UCSD Labor

 Nonlabor Format select UCSD Nonlabor

 Event Format select UCSD Events

o Click on Save. You will not be able to continue without saving first.

o Then you can Associate Contract Lines by clicking on the Plus sign icon.

 Add contract lines by searching as needed.

o Use the drop down to Save and Close

PPM User Guide

Revenue Plan Section

 Click on the Plus sign icon to Create a Revenue Plan and complete the following:

o Name

o Method Name select Amount Based Revenue

o Associate Contract Lines by clicking on the Plus sign icon.

 Add contract lines by searching as needed.

 Use the drop down to Save and Close

 Click Save again for the Billing tab

Lines tab

This is where you will set the amount for Project/Task Overview tab

 Enter Line Amount with the dollar amount of the contract.

 Click on Save

Associated Projects tab

 Click on the Plus sign icon, then enter the following:

o Project Name which will auto populate Project Number

o Task Name

o Funded Amount

 Click on Save when done and Submit

 Submit to Approvers

 Use the drop down to Save and Close

See KB0032314 for most up to date steps

2.3.3.2 Project Billing using Contracts

A project or a project and task(s) must be associated to a contract line if either the invoice or revenue method classification on the bill plan or revenue plan. A bill plan is a set of instructions on a contract that define how to invoice a customer, and a revenue plan is a set of instructions for recognizing revenue within a contract. Multiple contract lines on a contract can use the same or different revenue plans.

 For amount-based contract lines, the association of a project or task to a contract line is optional.

 A contract line can be associated with multiple projects and tasks.

 A project can be associated with multiple contract lines.

Creating and associating contract lines to projects involves the following steps:

1. Create a contract line and associate one or more projects to it.

2. Define billing controls for the contract line, if the contract type is enabled for billing controls.

3. Add a bill plan and revenue plan to the contract line.

PPM User Guide

Invoice events are automatically created during invoice generation if the invoice method is percent spent or percent complete. Manual events are also processed during invoice generation. A billing transaction is created for each automatic or manual event. The billing transaction is the source for creating invoice distributions.

Project and contract components work together to create invoice distributions. The contract contains the instructions for calculating invoice amounts, and the project owns the cost transaction details. When you generate an invoice, invoice distributions are created for the contract and transferred to the Receivables module. The revenue is generated in PPM when an event is completed. Customer payments are applied in the Receivables module.

Here are the accounting entries for your reference:

 Billing Events are completed.

o Dr. Unbilled AR, Cr. Revenue (generated from PPM)

 Released and transferred invoice to the Receivables module.

o Dr. AR, Cr. Unbilled AR (generated from AR)

 Customer payment received and applied to the open invoice.

o Dr. Cash Clearing Account, Cr. AR (generated from AR)

2.3.3.2.1 Generate a Billing Event

1. Click on Contract Management, then click on Invoices.

2. On the right-hand side, click on the Tasks icon for the drop-down menu. Select Manage Events

3. Click on the Plus sign to create a new event. Fill in the following:

o Business Unit with UCSD Campus

o Contract Number

o Contract Line

o Event Number is automatically assigned.

o Event Type for most departments will be Milestone.

o Completion Date although it does not have an asterisk, you will get an error if not entered. This will drive when the invoice is generated. See below.

o Amount in Bill Transaction Currency is the amount of the invoice.

o Project Name

o Task Name

o Click on Save and Close

2.3.3.2.2 Create Invoice

Invoice creation process is run automatically daily. If you need to create an invoice manually, follow the steps below. Completion Date will determine when an invoice is generated. If entering a date in the future, the Invoice will be created automatically on that date.

Once invoices are submitted, the Accounts Receivable central office will approve and transfer to the Receivables module. If the customer account is setup with invoice delivery via email, the system will automatically deliver the invoice via email to the customer on a daily basis.

1. Open the Oracle home page.

2. Select the Projects and Awards tab.

PPM User Guide

3. Select the Contract Invoices module.

4. Open the right-hand task panel > under Process, select Generate Invoices

5. Under the Generate Invoices tab, complete the following fields:

o Business Unit

o Contract Number (enter only one)

o Delete Approved and Approval Rejected Invoices: change to "No"

o Generate Ineligible Data: change to "Detail"

6. Select Submit

See KB0033947 for most up to date steps

2.3.3.3

Differential Income

Departments providing services to external organizations (non-UC users) must include indirect cost (overhead) recovery. This is an overhead cost recovery rate, which is also referred to as Differential Income (DI). Service agreements that fall under recharge activities as well as miscellaneous service agreements are subject to DI (see section 2.3.4.2 for agreement classifications). Differential Income is an overhead cost recovery rate. It is the rate applied to all sales to nonUC users of activities in order to recover the indirect cost related to the activity. This is separate from the Federally negotiated overheard rates used for sponsored projects. Please see this link for more information: https://blink.ucsd.edu/finance/financial-analysis-office/ssa/ssa-guidance/overhead-cost-recovery-differentialincome.html. Departments are responsible for billing the external organizations in accordance with the terms of the contract through project billing. An external revenue account should be used to record external revenue associated to a recharge operation fund. Please use the COA lookup report on bah.ucsd.edu to lookup your account number or contact Internal Controls and Accounting (CP&A).

For more information on Differential Income, please see How to Record Departmental Support Differential Income KBA Information on the process for Equipment Renewal/Replacement is pending. The Central Administration portion of the DI Assessment is posted in PPM as a cost and recorded in the GL.

2.3.4

Recharges

A recharge is an internal charging mechanism for products or services provided by financial units within the University. At UCSD there are 2 types of recharges: Internal Billing done by Recharge Operations and Cost Recovery done by the process of recharge mechanism.

2.3.4.1

Recharge Operations

Recharge Operations are a type of general project. Each recharge operation has a separate general project, category of line of service, and class type of Recharge in PPM. The project will represent the overall recharge operation, and the tasks the various services provided. The project name prefix for Recharge Operations is REC.

2.3.4.1.1

Internal Billing/Internal “revenue”

For Recharge Operations, the units providing the products or services function as a non-profit business and recharge in order to recover the costs of providing such products or services. Recharge Internal Billing, sometimes referred to as

PPM User Guide

internal revenue or recharge income, is not reported the same way on the Financial Statements as external revenue nor is it recognized as revenue. The credit for a recharge is not accounted for as revenue, but as a cost recovery - negative project costs. Recharge Operations are approved “businesses” through the Costing Policy and Analysis Office.

Example: The Animal Care Program department administers a recharge operation that provides animal care services to the campus. Each category of animal is a separate service with different rates. They would create one Project for the overall recharge operations, and separate tasks for the different animals.

All recharges are project-to-project. The customer for the service may choose to use the default project for their financial unit or provide a different project to be billed. If a department does not provide a valid project and task for the service or does not have a project setup (since general projects are optional), the recharge unit can charge to the customers default (DFLT) project. There is one credit account for all recharge operations. Each operation must use a distinct debit account. There is a corresponding Expenditure Type for each recharge operation.

Recharges are imported into Project Costs in PPM via the Miscellaneous Cost Import (MCI). Each recharge transaction consists of two lines in the file: (1) an expense on the project belonging to the customer, and (2) a contra-expense on the project for the recharge operation representing their “revenue” or “internal income”. For more information, see How to Process Recharges in PPM.

Example: Animal Care has provided services to the Biology department, and now it is time for them to recover costs via recharge.

Recharge Operations should process the Miscellaneous Cost Import (MCI) into PPM via API or by using the RMP Application.

Any Projects Cost failures should be resolved by the Recharge Operation. See the below section on Resolving Unprocessed Cost Errors.

2.3.4.1.2 External Billing outside UC

Recharge operations providing service to external organization (non-UC users) must bill customers through PPM Project Billing. See section 2.3.3.2 for more information on project billing. The billings must include indirect cost (overhead) recovery (Differential Income). Please see section 2.3.3.3 for more information on Differential Income

2.3.4.1.3

Recharge Operations with Capital Equipment

Recharge Operations with Capital Equipment will have a task for Renewal/Replacement - Equipment Reserve. The Equipment Reserve is used to record depreciation and is accumulated to replace equipment to ensure that the facilities are operating on a continuous basis. An MCI File prepared and submitted to Internal Controls and Accounting has to be used to move depreciation from the operating fund of the project to the renewal and replacement fund of the project.

PPM User Guide

2.3.4.2 Recharge mechanism for non-recharge operations.

University Sales and Services Activities that go through a proposal and approval process that are able to perform the recharge mechanism and are not identified as a Recharge Operation will be permitted to use Miscellaneous Cost Import (MCI) into PPM. Users should process these files through their custom integration or the RMP Application.

Any Projects Cost failures should be resolved by the Recharge Operation or cost recovery initiator. See the below section 8 on Resolving Unprocessed Cost Errors.

Qualifying activities with approval are in the table below:

Self-Supporting Activity

Auxiliary Enterprise Activities

Sales and Services of Educational Activities

Definition

Auxiliary enterprise activities are self-supporting activities which provide non-instructional support in the form of goods and/or services primarily to individual students, faculty and staff upon payment of a specific user charge or fee for the goods and/or services provided. Services to other departments or to the general public are incidental.

Academic support activities are recharge or income-producing activities within academic departments which provide, at approved rates and on a regular and continuing basis, goods and/or services to campus sponsored research projects and university funded activities. Academic departments are defined as any department of instruction and/or research including Organized Research Units.

Service Enterprise Service enterprise activities are activities which provide, at approved rates and on a regular and continuing basis, goods and/or services to a wide variety of campus departments. Typically, service enterprise activities will have only incidental sales to individuals.

Other IncomeProducing Activities

Other income-producing activities provide goods and/or services to a wide range of customers that include non-UC users, students, faculty, staff and other campus departments. There may be an overlap with the definitions of auxiliary enterprise, service enterprise and academic support activities categories. Due to strict federal costing principles, other income-producing activities, except conferences, publications and certain rentals of space, should not have any recharges to federal funds/sponsored research projects. Service agreements approved by Business Contracts Office in Procurement & Contracts, a division of Business and Financial Services or their designee, are also recorded in this category.

Medical Center The Medical Center provides goods and/or services entirely to other Hospital units within the same fund group. However, the rates or rate methodology of Medical Center activities, which recharge funds other than the same fund group, will be subject to review and approval.

Service Agreements by Non-Recharge Units

Service agreements are written legal contracts between the University and external sources containing terms and conditions under which goods and/or services are to be furnished by the University. Service agreements are normally issued by approved recharge activities (Service Enterprise and Academic Support) for ongoing or continuous goods and/or services. However, service agreements can be issued by non-recharge activities for one-time or occasional sales of goods and/or services. Waivers of the differential income must be approved.

Examples

Bookstore, Parking, Housing, Dining and Hospitality Services

Testing services, computer services and illustration services

Police and Telecommunication Services

Campus recreation classes, academic course material, rental of space, conference programs

Urgent care, surgical facilities, and patient beds

Consulting Services

PPM User Guide

Debit and Credits using recharge mechanism must use Expenditure Type Accounts in PPM that associate to Recharge Sales and Service Account pairs. The net impact on the Account hierarchy (77xxxx) must be zero. Users using this mechanism must be approved by the Costing Policy and Analysis Office.

For more information on processing MCI for Recharge Operations or Recharge mechanism, please see information here: https://collab.ucsd.edu/display/ESRFIS/Recharge+Remediation

2.3.5 Budget

The following section provides guidance for financial staff on budgeting for general projects. Budgets are not mandatory. Therefore, it is the department’s responsibility to ensure the budgets are adequately and properly established. Initial FY Budgets may be loaded from EPBCS plan. Edits are then managed and controlled within departments.

Budgets should be considered as “authority to spend”. This could mean revenue and resources already earned/provided, or it may mean expected amount to receive. For example, for a faculty startup, they may receive $1M, but it’s allocated as spent and it may span many years. It would make sense to budget $1M so that the authority to spend/campus commitment for the startup can be compared to actuals over time. For Gifts, to the Foundation (funds starting A-L) departments may choose to set the budget at the Foundation Gift amount, or only set at the campus ledger transferred amount. The risk of setting at the Foundation amount is that it’s not yet on the ledger, and so the amounts and projects that this gift may be ultimately transferred to may change. For gifts to campus funds (funds starting M-Z) the cash is provided at the time it is received so there is no timing to account for.

Budgets are set up based on Resources. You can set Resources at the task level. Resource options are based on Expenditure Categories.

Steps for creating a Budget:

 Go to Projects> Project Financial Management and search for project.

 Click on the Project and go to Manage Project Budget. You will be directed to the Manage Budget Versions Page

 Click the ‘+’ sign or use the drop down to choose Create Budget Lines Manually

 Click on the task row 1 (or task to add resources to). Click on the + sign underneath the field header Resources.

 Enter in Project Budget Amount

 Scroll to the bottom of the screen. Select Save and Close

 Repeat above steps as needed for additional tasks and/or resources.

 You have 2 options at this point:

o If you're not finished and want to come back at a later time, click Save in the upper right-hand order. This will allow you to come back at a later time to complete the budget assignments.

o Once you are finished, click the Submit button in the upper right-hand side.

The Baseline version is what the system uses for calculations in reports. You can also create additional versions to mockup different scenarios of budgeting.

PPM User Guide

2.4

Project Grouping

It is possible to group projects where a common data element can be identified. There is not an immediate solution for grouping “arbitrary” projects based on PI or Fund Manager knowledge. Here are the options currently available and factors to help you determine which selection meets your needs:

Option Description

Portfolio Based by PI or PM

Project Classifications

Oracle Reporting Customizations

Group by PI or project manager name.

Custom Reports

Group by project classifications; available since go live, they have been expanded and reviewed by BFG. View the PPM User Guide pages 7-10 for a full list of classifications.

Select and then save search criteria as customization for future queries.

Factors to Consider

 This in in line with the current OFC reporting structure

 Option does not allow for arbitrary grouping

 Project Classifications allow for a more granular grouping from project type.

 Option does not allow for arbitrary grouping

 Allows the user to set customized report selections in the Oracle BI reports.

 Does not allow you to share this customization across users.

 Have to maintain/update customization as needed

Existing Project Data Elements

Build a custom report out of the Activity Hub (Cognos/Tableau)

Group by data elements including:

Department Reporting Category

Project Type

Project Naming Conventions

Customer

Contract

 Financial segment elements (fund, function, location, etc.)

 Build a custom report out of the Activity Hub (Cognos/Tableau)

 Requires technical/report writing support

 Broader, less granular

The current Fund Manager Persona workgroup will evaluate adding Project Classifications to reports. Also, we continue to work with Oracle and monitor their product updates for additional solutions.

Want to update your project classifications?

Update through PADUA

PPM User Guide

2.5

Membership Agreements

Membership Agreements were converted to Oracle as projects and contracts - not awards. This is due to the multi award structure to a single project. In addition, the management of these awards which includes billing is also done by the department and are treated as service agreements.

Pre-Oracle:

SPF would setup the fund, then allocate per payment received and notify OCGA anytime payments were received per Sponsor as billed by department.

Oracle:

Departments will

 Manage these agreements.

 Setup project(s) with fund 12322 Non-Gift Membership Agreements

 Project prefix “MEM”

 Setup contract(s) with fund 12322 and revenue account 440000- Other Sources Revenue

 Contract Name: “Center Membership XXXXX”

 Create contracts per customer (sponsor) and manage all the billing.

 Work with OCGA for any updates in the agreement or KR as needed.

The contract approval will go to Financial Operations-AR team who will review it to make sure the revenue account and fund are correct and spot check other elements.

Steps:

1. If a new project is needed, Department can create through PADUA and use Fund # 12322 Non-Gift Membership Agreements. Remember that one project can be used and associated with multiple contracts.

2. Once the project is created, Department will create contract(s) or associate the new project to existing contract(s) by following the steps on the following KBAs.

 KBA How to Create a PPM Contract in Order to Bill External Customer

 How to Resolve PPM Contract Creation Error Message

 PPM Contract Amendments

3. Department will monitor incoming payments and request payment application to invoices through S&S

Consolidating Converted Projects to New Process

For current General Projects that converted or may have been created under 20700 that are membership agreements:

 Department will need to request new General Project(s) using fund 12322 Non-Gift Membership Agreements or new tasks. Any existing costs can be updated to the new fund-please identify this in the request.

 Update contracts to associate new Projects as needed.

PPM User Guide

 Process GL Journal to move from 20700 to Fund 12322 Non-Gift Membership Agreements by working with their VC area.

 In November 2021, the converted billing and revenue were loaded as this was missed during conversion.

2.6 Projects Created in Error

Use project status “Closed-DNU-Bad Record” to close a project that was created in error.

Example use cases:

 SP where a project is setup in error because it wasn’t linked with the award.

 Project setup as SP when should have been GP or vice versa or other incorrect template.

 GP where project setup but later realized already setup or should have been SP.

3 Cost Transfers

Costs should be corrected at the source. For example, ISIS costs should be rectified in the student system and then flow to Oracle. Payroll in UCPath, Recharges with recharge unit, Payables with AP, etc.

3.1 Applicable Policies and Regulations

A cost transfer is defined as a reallocation of a payroll or non-payroll expense, or cost, from one account distribution to another after the expense has been recorded in the operating ledger, for the purpose of correcting an error, redistributing an expense, or changing the original fund source. There are a number of different policies, procedures, and cost principles that address cost transfers. Uniform Guidance does not provide extensive guidance on cost transfers relating to federal awards, however there are some cost principles that address cost transfers in general. For example, section 200.405(c) states "Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non-Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards."

The most specific guidance from the federal government on cost transfers appears in the NIH Grants Policy Manual under section 7.5 (Cost Transfers, Overruns, and Accelerated and Delayed Expenditures), which states:

PPM User Guide

Cost transfers to NIH grants by recipients, consortium participants, or contractors under grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the recipient, consortium participant, or contractor. An explanation merely stating that the transfer was made "to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. [emphasis added]

Recipients must maintain documentation of cost transfers, pursuant to 45 CFR 75.364, and must make it available for audit or other review (see Administrative Requirements-Monitoring-Record Retention and Access). The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence.

In addition to the above, University of California policy BFB A-47: Direct Costing Procedures, section 3 (Expenditure Adjustments) sets forth limitation and criteria for making expenditure adjustments. Section 3.B.4 of this policy states that cost transfers:

must be fully explained, justified, and approved by the unit administrator(s) involved in the transaction. (an explanation which merely states that the adjustment being made is "to correct an error," "to transfer to correct project," or "expenditure inadvertently charged to incorrect account/fund" is not sufficient). In the case of adjustments which involve Federal grants and contracts, the certification and approval signatures must include that of the principal investigator, department head, or other academic official. For transfers processed electronically or using on-line systems, the certification and approval of the department head, principal investigator or other academic official must be maintained by the department in accordance with local campus requirements.

With consideration of the above federal guidelines, a best practice for any institution that receives federal funds is to implement a process to ensure that cost transfers involving federal funds are supported by documentation that fully explains the purpose of the transfers.

3.2 UCSD Local Implementation Requirements

 All cost transfers should involve at least two employees to ensure proper segregation of duties and internal controls. At a minimum, cost transfers should involve a transaction preparer and a separate approver. The secondary approver could be a Fund Manager or Principal Investigator (PI) or other employees with knowledge of the transactions.

 In order to comply with UC policy requirements for cost transfers involving federal funds, any cost transfer that is not electronically approved by the PI should be supported by other documentary evidence that the transfer was certified and approved by the PI, department head (Chair), or other academic delegates with knowledge of the transactions. For this purpose, documentary evidence could include any offline documentation demonstrating that the PI was aware and approved of the transactions, which could include emails from the PI approving of the transfer or hardcopy forms with the PI’s wet signature.

 The requester should be required to provide proper and adequate justification for the transfer.

PPM User Guide

 For cost transfers involving federal funds, the PI should be notified of the transfer since they are ultimately responsible for those funds.

 For cost transfers involving federal funds, the process should include central independent oversight and monitoring to ensure that cost transfers processed by departments are reasonable and timely, and that the justification is sufficient (including any necessary attachments). The legacy ENPET system accomplished this objective by using a decision tree to identify transactions that were High-risk and routed those transactions to SPF for review and approval before posting them to the ledger.

 Cost Corrections are defined as corrections to key entry errors, not necessarily a change in accounting. For example, an invoice charged to the correct string, but missing POETAF. By correcting the POETAF, that is a correction, not a transfer.

3.3 Cost Transfer Process in Oracle

Cost Transfers are supported in Oracle. Departments can initiate cost transfers directly through Manage Project Costs (Projects>Costs>Task menu>Manage Project Costs). Central offices utilize the same functionality, but depending on their role, have no or different workflow from departments. Cost Transfers should always be initiated in the source system. However, Oracle functionality allows for cost transfers between project to project within PPM. Payroll cost transfers should be processed through UCPath (Direct Retro).

3.3.1 Process

 User initiates in Oracle

 Routes to receiving project workflow group.

o Workflow groups are defined as users assigned to a security role.

o Security roles are created for each level 4 FinU group.

 Exception requests should be submitted through S&S for review through the Projects Workgroup

 Payroll costs went through additional central office approval until Spring of 2021

 Reports to be used for post audit review.

Training can be found here: https://support.ucsd.edu/services?

id=kb_article_view&sys_kb_id=beccd5be1b056890df40ed7dee4bcbc7&table=kb_knowledge

Slide deck: https://ucsdcloud-my.sharepoint.com/:p:/g/personal/lsvirgil_ucsd_edu/ ESxn9FR2s9ZAo_JK5qpVh8MBCSy6joDCifXMnaBGAw0Scg

3.3.1.1: Central Office tools for Transfers

As Central Offices have the ability to process cost transfers within PPM and between PPM and the GL. To correct between PPM and GL, there are a few different methods:

a. AP: Mixed Invoice/Net Zero invoice

b. PPM Cost + Journal. The journal should ensure that it clears the raw cost clearing of the PPM Cost as determined by the SLAs.

c. PPM FBDI Import: Specific FBDI file with accounting that will create the PPM Cost entry and post to the chart string populated in the file. This is the same as step b except that it does both steps in 1, ensuring additional controls.

d. Manual Costs: Creating Costs through a batch: Unprocessed, ADF File or FBDI

PPM User Guide

3.3.2 Types of Cost Transfers

See the Cost Transfer Guide to find out the type of cost transfers.

3.3.3

Cost Transfer Reporting

Reporting on Cost transfer details can be found on reports.ucsd.edu under the Project Cost Transfer Panorama.

3.3.4

Cost Transfer vs Cost Recovery vs Resource Transfer

When to do a cost transfer or cost recovery vs resource transfer in the GL: https://support.ucsd.edu/nav_to.do?uri= %2Fkb_view.do%3Fsys_kb_id%3Ddc135e50db4a6050d4781c79139619e1%26sysparm_rank %3D1%26sysparm_tsqueryId%3Dddefd82fdb526890d4781c79139619d0

4 Cash Receipts

Cash Receipts are processed in the Receivables Module, not in PPM, but are often related to PPM processes so are included here.

4.1.1

Miscellaneous Revenue

Miscellaneous revenue is considered non-receivables related transactions which may include revenue from retail operations, investment income, commission, etc. It does not apply to federal or other sponsored research funds. It does not apply to gift funds. Gifts must be routed through Gift Services in Advancement. Gift revenue will be recorded by the Gift and Foundation Accounting team. Miscellaneous revenue is posted to the project chart string, if provided in the Cash Deposit Form, at the general ledger level, not in PPM. In other words, revenue outside of project billing is recorded at the general ledger only but can reference a project number in the Chart String.

Self-supporting units may integrate their Point of Sale (POS) system or recap process with Oracle API to record POS activities as miscellaneous receipts. For more information, contact the Accounts Receivable Central Office through Services & Support.

4.1.2 Expense Reimbursements

Cash deposits to expense accounts are allowed under these circumstances:

 Refunds or rebates from a vendor for goods or services purchased from the vendor.

 Reimbursement of personal usage of university resources, such as use of travel card for personal expenses.

 Reimbursement of items purchased to facilitate an activity.

When completing the Cash Deposit Form located in Services and Support, the function code cannot be 000 when making a deposit to an expense account. Expenditure type, project number and task number are required to process an expense reimbursement deposit against a project. The reimbursement will be shown in the project as a negative cost with the specified expenditure type.

Supporting documentation of expense reimbursement must be provided, and transactions are subject to central office approval.

PPM User Guide

4.1.3 Program Income

Payments for program income must be deposited with the correct sponsored research project, task and Funding Source. See above in Sponsored Projects for more information.

5 Revenue Recognition

Revenue recognition is based on accrual accounting in accordance with Generally Accepted Accounting Principles (GAAP). Revenue is recognized when earned, and expenses are recognized when incurred. Revenue is considered earned when the university has substantially met its obligation to be entitled to the benefits represented by the revenue. Revenue is recorded when earned, regardless of the timing of cash receipts. In other words, revenue does not equal cash received. In the event a project stipulates performance measures, revenue is considered earned when the performance measures are completed.

In Oracle, revenue scheduling rules determine the number of periods and the percentage of total revenue to record in each accounting period. Invoicing rules determine when to recognize the receivable for invoices that span more than one accounting period.

See Sponsored Project Billing and PPM Project Billing for additional information on how PPM recognizes revenue.

5.1.1 Unearned Revenue

Unearned Revenue is money received by UC San Diego in advance of having provided the services or goods. An example of this is a pre-payment. Unearned revenues are not yet revenues and therefore cannot be reported on the income statement. Instead, the unearned revenue amount must be reported on the balance sheet as a liability.

Example: UC San Diego engages in a consulting agreement for $60,000. The terms require a payment of $15,000 at the time the contract is signed, and $45,000 at the end of the project. The first $15,000 will be booked to unearned revenue and as revenue is earned based on completion of the work, revenue gets recognized (dr. unearned revenue, cr. Revenue).

Option only available in the Receivables Module - Use “deferred revenue scheduling rules” only for invoices that are assigned the In Advance invoicing rule. If you use a deferred revenue scheduling rule with a single accounting period, Receivables recognizes the revenue in the period specified. If the deferred scheduling rule is used with multiple accounting periods. Receivables creates the revenue recognition schedule based on the rule, and the start date is determined by the accounting start date provided. If the accounting start date occurs in a closed accounting period, Receivables posts that portion of revenue into the subsequent open accounting period.

Unearned revenue for project billing is something that the Accounts Receivable office in collaboration with the project team will continue to explore. This guide will be updated when more information is available.